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How to detect a toxic customer
- jacquesm 16y agoHey, funny, I think I've had that customer too! I ended up referring him and his company to my worst sworn enemy competitor, haven't heard from him since.
- deleted 16y ago[deleted]
- spolsky 16y agoThis detection process doesn't detect toxic customers, it detects corporate customers at large companies. It's fine for a small startup to cater to small startups, but the big companies have big budgets, and eventually, you'll be making 80% of your money off of them, so learning how to deal with them can be helpful. 1. Big companies often have purchasing departments actually do the purchase. They are trained to expect discounts and the people in the purchasing department know a lot more about asking for discounts than they know about software, because that is their specialized role in the organization. If you politely tell them that you have one price for everyone, they'll still purchase, because the purchasing department ususally doesn't have the power to stop the purchase. 2. Those 80-question checklists usually come out of the following, typical corporate process: * A team of people identifies a need for software * The team meets to agree on everything they need * The junior person on the team is tasked with evaluating 12 possible products to see which one is best * That person makes up a spreadsheet and sends it to each of the vendors hoping that they will do his homework for him * The vendors who have decent presales support or sales teams fill out the spreadsheets by marking everything as "Yes" or "Yes with a footnote" and get the deal. This also explains the "multiple questions that can be answered from a website" -- it's a sign of a person who has been put in charge of evaluating multiple products, not a sign of a toxic customer. 3. Multiple contacts through multiple channels are usually the sign of multiple interested parties at the client site. You can't sell to big companies without touching multiple people. One of a salesperson's most important jobs is helping the customer themselves get organized and make a purchase. A good salesperson helps the person who wants your software navigate their own corporate purchasing politics. Summary: while it's fine to turn away truly toxic customers, and you are welcome to decide that you'd rather sell to the starving startup founders on Y-combinator who would rather spend 2 hours scouring your website than deal with a salesperson, the corporate customers turn out to be remarkably price-insensitive, once they make a purchase they will keep paying you maintenance for years long after the product is not even in use, and they're just as likely to leave you alone as the small guys, but they do have "multiple stakeholders" and if you want to sell to them you need a process that matches their reality.
- StavrosK 16y agoWell, this is the first piece of actual experience I've gotten from the web in a while, and I didn't even have to screw anything up! I have a feeling it will come in handy in the future, thanks Joel.
- arethuza 16y agoHaving been on both side of the enterprise sales process I think this is a remarkably insightful post. A lot of this goes to explain why enterprise software often needs to be quite expensive - you have to pay for a lot of time and effort from sales and technical pre-sales people hand-holding potential customers and helping them through their software purchasing process. [Edit: I didn't notice who wrote that comment before replying!]
- arethuza 16y agoActually, there might be a market for some kind of tool to help enterprises gather software requirements, create shortlist of candidate vendors and allow the vendors to reply online.
- HeyLaughingBoy 16y agoWell, software for generalized decision making already exists so I can certainly see a market for more specialized versions.
- Hoff 16y agoMicrosoft Excel owns that niche. If you're going to aim for the same niche, it'll likely involve a web service for creating RFQs and also for building up a database of both the requests as well as building up the feature loci of the various queries; you'll need to differentiate your service from the aforementioned Excel and from Google Docs and various of the testing services. Acquiring and then maintaining sufficient feature data (whether via web services or scraping) is probably going to be the tough part. Look around for folks already dealing in electronic purchase, e-procurment, and particularly at SAP.
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- wccrawford 16y agoI totally agree with this. I'm a very customer-oriented person, but there are a few customers that just aren't worth supporting. If you can reject them gracefully, it's in your best interest to do so. One of the problems with that is that even jerks have friends. If you reject them, they'll tell those friends and you could lose even more customers. In this case, when they were going to have to write a custom solution for this customer, it was definitely the way to go. As a side note, my father asks for 'discounts' all the time. He almost never gets them, and doesn't act entitled when he doesn't, but it sometimes works. So he keeps doing it. I really have to start doing it myself to see what I get.
- dagw 16y agoCustom solutions means consulting fees. And if it is a big company or organization you are selling to, once they've decided on you product, you can more or less make up any number you want and they'll keep paying since it is far less work than going through a new round of purchasing.
- JacobAldridge 16y agoeven jerks have friends. If you reject them, they'll tell those friends and you could lose even more customers. My experience having done several client management studies with clients, is that jerks have friends ... who are also jerks. (Generalising, of course, but if you've got a solid enough business model you won't mind losing a few good clients if it means not dealing with a larger number of toxic clients.) Best case study I did was with a branding agency. We got a list of their clients (about 100) and had the owner mark them each as Up, Down, or Neutral in terms of energy. We then had the team explore where each of the 'Down' clients (about 15) came from - half were from the Yellow Pages (again, using my experience, more price-oriented than service or quality) ... and the other half were referrals from the clients who came through the Yellow Pages!
- Kisil 16y agoAnd did you find out how many of the up and neutral clients also came from the yellow pages? That bit of information is useful only if it draws a distinction, e.g. what if the agency only had one working form of advertising? (Of course this almost goes without saying, and I don't doubt you thought of it, but this is such a common logic error that I thought it shouldn't be left hanging in a public forum.)
- kls 16y agoWarning Sign #2: Asks for a Discount (With No Reason) The funny part about this one, is I always ask for a discount for no real reason. Even if I am only buying a single piece of software. Why, because it lets me know up front if a vendor is going to be flexible with large volume purchases and OEM arrangements. Funny story, I was evaluating some screen capture software for OSX not too long ago for a client of mine. I was building a web app for them and part of the work flow for their content was screen capture. Anyway, I emailed a company that had a reputable product and basically told them that I had no need for the pro version, would not be using the pro version for any commercial work but that I would like to use the pro version to teach my daughter about video editing. I then asked if they would consider selling me the pro version at the basic software packages rate. I framed the story in this fashion for several reasons. I had just told the developer/owner that I would be using it for non-commercial and educational purposes both of which usually get some form of pricing plan that is below the commercial mark-up lack of having a plan to deal with either tells me that they do not have a competent pricing structure, and quite possibly that they lack a formal sales organization and negotiating deals later on would be difficult due to lack of attention to pricing structure for the various fringe purchasing needs. Dealing with companies that do not have flexible pricing policies can be difficult when you are dropping large purchases in which no one realistically pays full price per seat. Anyways, point is be careful of putting earmarks on customers, this small developer lost a $75,000 purchase (what we set aside for a site license) for seats on his product due to the fact that he showed that he was not flexible in his pricing structure. Allowing me to purchase the pro version at the basic version price would have cost him nothing and given the purpose it was purchased under "non-commercial and educational" there was a need to reduce price to be competitive. Instead, I got a dismissive response that the basic version was good enough for my needs and that if I wanted the pro version I would have to pay full price. Needless to say, his competitor was very happy with the $75,000 purchase order. I guess, long story short, bargain shoppers are not always bad, some people negotiate over what seem to be inconsequential amounts because rather than haggling over dollars they are finding out up front whether a relationship with your company will be tenable.
- Monkeyget 16y agoSo you turned down a product because you failed to lie your way into getting a pro version? I fail to see how turning down a one-off for a personal request makes a company bad at handling corporate customers.
- mark_l_watson 16y agoI pass on consulting work if I have any strong feelings that the customer and I are not a good fit. Many years ago, I had a potential new customer spend a lot of time telling me about the problems he had with developers, mostly that they wanted to walk from his projects. I ended up accepting work from him anyway because he was a nice guy and interesting to talk with. It took me a few months to finish promised tasks and extricate myself from his project, becoming another "walker." I have had experience of clearly being at fault also: twice I have let myself be talked into projects in tech areas where my experience was really thin, and within a short period of time, had to notify the two customers that I was not a good fit to their needs. I was very apologetic both times and obviously did not bill them, but they were out the time documenting the tasks for me.
- rtp 16y agoIf you are a people-pleaser (and this doesn't necessarily carry a negative connotation), then it's a good tactic for any employer to play the victim card by talking crap about previous "walkers" in order to instill loyalty. You don't want to be a "walker", do you? ;) Actually, I think you should pay extra precaution when dealing with "trashtalking victims", because I think the risk of dealing with a toxic customer is greater than losing a bit of revenue from someone who was genuinely burned.
- patio11 16y agoI am convinced there exists a breed of customer who needs to feel a human is in the loop to buy something. I mean, "Yes ma'am, it does make bingo cards." has made me three sales. They're not noticeably pathological customers. (Those certainly exist, though. Charge more, and they'll mostly inflict themselves on your competitors instead.)
- steveklabnik 16y agoPoor people, they've been beaten into submission by bad software not to trust even the simplest of applications... :/
- shay 16y ago/Warning Sign #1: Disrespectful or Abrupt/ I've found that people who email with no explanation or "sell" of their own but just immediate, terse requests like "What are your rates?" or "I need a copywriter. You available?" are typically NOT interested in finding the right person for themselves or their product; instead, they're looking to just outsource what they think they COULD do themselves, if only they had time/energy/desire. People who know they're considering (hopefully carefully) how to add value to their product/life are the ones who will take the time to build trust from the beginning, will be honest about expectations, and are more likely to give the freedom and flexibility necessary to maintain a healthy working relationship over time.
- brewski 16y agoAfter poking around his site, I laughed a little after he described Emacs as a "stripped down, no frills text editor". http://www.softwarebyrob.com/2005/09/05/better-developer-dont-use-a-dull-knife/ http://www.softwarebyrob.com/2005/09/05/better-developer-don...
- SwellJoe 16y agoIf I didn't know better I'd think he was trolling. He goes on to compare emacs to COBOL. I don't even like emacs (I use vim, of course), but it shows an unbelievable level of ignorance of the current state of emacs to act as though it's "ancient" and clearly inferior to the Visual Studio editor.
- jff 16y agoIt's pretty ancient. It's older than vi, and vi is from the 70s. Yes, there's been some development, but using Emacs on TOPS-10 or ITS is an awful lot like using it under Linux in 2010.
- SwellJoe 16y ago"Yes, there's been some development, but using Emacs on TOPS-10 or ITS is an awful lot like using it under Linux in 2010." That's a huge stretch, and kinda like saying that using Linux is an awful lot like using SunOS 1.0. Sure, the basics of use are the same, and someone who used an ancient emacs version could pickup using a modern version reasonably easily, but syntax highlighting, auto-completion, X and GUI support, windowing, multi-file editing, etc. have been added over the years (and that's just stuff I know of, off the top of my head, and I don't even use emacs). The emacs distribution has grown by several orders of magnitude in size since those TOPS-10 and ITS implementations. My point is that Emacs is every bit the editor that Visual Studio editor is, and contains pretty much all the same features, and a lot that Visual Studio will never have. And, more importantly, the most productive developers I've ever known used either emacs or vim...I can't think of a single great developer that uses Visual Studio (I'm sure they exist, but I've yet to meet one). It's just idiotic to claim that emacs is an ineffective tool when the evidence is so strong that it is extremely effective for millions of developers.
- phillijw 16y agoI have a vendor that provides a product that has bugs all over the place. I am really, really sick of finding my own workarounds for these bugs. I gave up even looking at the poor documentation long ago and just email them every time now. If they want me to stop they can either lose my business or fix their software. I expect other products and clients are similar.
- protomyth 16y agoI went through this process with a large company, and one of the interesting things that was done was a check with Dunn and Bradstreet (www.dnb.com). It seems they would not buy from someone without a D&B number and "sufficient" history.
- kenjackson 16y agoDon't you have forums for your product? If you're doing invoicing software this would make sense. I've had that for multiple products and almost all of these issues get hashed out in the forums, often by existing customers. And in particular, if you're seeing people asking multiple questions that could answered from the website then there's probably something wrong with the site.
- waterside81 16y agoThe timing of this is uncanny, we were just having a discussion about this internally. I've found that a great technique to dealing with difficult customers is to show them that you don't mind them taking their business elsewhere, as the OP mentions. It always amazes me at how quickly this disarms people and completely changes their attitude and approach. And another example of toxic customers: people paying with Groupons.
- hammock 16y agoThe moral of this story is not to detect toxic customers. The moral is that he almost lost a sale, were it not for the other guy stepping in. The moral is that he should have asked to speak with someone else at the company to continue the selling process. This guy almost blew it.
- icey 16y agoHere's a faster way of telling if you're dealing with a toxic (corporate) customer: See how they react when you say "no" to something. This is them on their best behavior too; if the reaction is nasty then you have your answer.